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Understanding Supply Chain

“Supply chain management can be compared with a well-balanced and well-practiced relay team

 

—Cooper, M. C. and L. M. Ellram¹”

INTRODUCTION

Supply chain management (SCM) has emerged as an important business process concept that links the supplier to the customer through manufacturing. The capabilities of a supply chain can be leveraged to gain competitive advantages. Over the years, business firms have recognized that the processes whereby the business firms satisfy customer demand are of critical importance to any organization. Using these processes products are developed, manufactured, and delivered to customers, meeting their continuing service needs. The process that links the various elements of business operations is called as the supply chain process. A supply chain is a network of facilities and distribution options. This network performs the functions of materials procurement, conversion of these materials into finished goods, and finally distribution of the finished goods. Supply chains exist in both service and manufacturing organizations. However, the complexity of the chain depends on its product–market configuration.

SCM controls the physical flow (capacity and speed) of goods from source to point-of-use by aligning the capabilities of supply chain partners (suppliers, manufacturers, channel partners, and customers). SCM supports both differentiation- and cost-based strategies. The SCM approach contributes to world-class performance, which is beyond functional integration. SCM integrates the activities of all members of the value chain. Integration results in higher levels of performance than what can be achieved individually. SCM practices create supply chain integration that leads to superior business performance.

In a firm with a functional approach (marketing, distribution, planning, manufacturing, and purchasing) to its supply chain operation, the functional areas have their own objectives that are often conflicting, resulting in loss in productivity and profitability. For example, the marketing department's objectives of high customer service and maximization of sales volumes through product varieties conflict with manufacturing department's objective of producing standard products in volumes.

In a manufacturing organization, the operations are designed to enhance output and minimize costs. However, this agenda has little consideration for optimisation of inventory level and exploitation of capabilities of company's distribution channel. The procurement department often negotiates with suppliers with very little information beyond past buying patterns. This shows absence of an integrated plan for the organization. Hence, there is a need for integrating the different functions in the organization. However, integration is possible only through proper supply chain initiative.

For integration of the supply chain, a variety of business practices such as just-in-time manufacturing, quick response, and continuous replenishment are used. The integration will increase value at all stages of the chain of activities, from source to delivery. Integration of the supply chain raises customer satisfaction and provides increased value to customers. This is done by coordinating activities to reduce costs for all participants and creating value by eliminating non-value-added functions. Use of appropriate SCM practices can help in increasing the productivity and profitability of an organization. The supply chain approach recognizes that customers evaluate suppliers more than they do product attributes and availability. Value extends beyond price and includes total cost and service. Innovation can create new markets, while quality permits long-term presence. However, differentiation from competition can be achieved only though a capability that increases value to customers and protects margins.

EVOLUTION OF SUPPLY CHAIN CONCEPT

In the past, the functions of logistics, transportation, purchasing and supplies were referred to as SCM. But today, SCM looks into process integration, inventory visibility, cycle time reduction and channel coordination. The activities that integration covers are as follows:

• Procurement and inventory movement
• Supplier development and integration
• Operation management
• Channel and distribution management

Logistics activities have been in practice since the early 1900s. These activities were predominantly associated with operations of the military during wars for the movement of food and arms to its personnel. The use of logistics was to ensure the availability of the required material at the right place and at the right time. Logistics is used by the military even today supported by modern science and technology.

After the 1900s, industries started adopting SCM methods. The production, manufacturing and service sectors were the first to apply these methods. The marketing, accounting and production sectors were responsible for inventory management. SCM was being used as a tool for business transformation and was considered as a road map to a company's success, providing operational efficiency and cost effectiveness and enhancing customer service. Further, with advancement in technology, industries adopted Internet-based applications in SCM.

DEFINING SCM

Due to the globalization of markets, shortening lifecycle of products, spiralling costs, and increasing demands of customers, businesses the world over are faced with formidable challenges. Today, businesses are constantly under threat because the speed and manner in which business is conducted has changed radically. In the light of highly competitive and dynamic markets, business organizations, today, consider SCM to be the key area that can significantly impact the bottom-line. SCM may be defined as follows:

A supply is the quantity of inventory/goods available (in required quantity) for use or the actual replenishment of a product or component.

A supply chain is the link connecting a set of facilities, companies, demand and supply points, and service providers. This chain links the upstream suppliers and downstream customers with the flows of products, services, finances and information from a source to a customer.

SCM is the systematic and strategic coordination of all business functions within a company and across businesses within the supply chain to improve the long-term performance of individual companies and the supply chain, as a whole.

The primary focus of SCM is to serve consumers with excellent goods and services against optimum costs and quick response time. The purpose of SCM is to improve customer value and satisfaction.

In SCM, the following activities can be identified:

• Integration of customers and suppliers to business processes.
• Information flow among channel members for planning, implementation and monitoring processes.
• Sharing channel risks amongst partners to gain a competitive advantage.
• Co-operation among channel members to effectively manage the distribution process.
• Integration of processes for synergistic effects.
• Building and maintaining long-term relationships with partners.

The term “supply chain management” was first coined by consultant Keith Oliver, of the strategy consulting firm Booz Allen Hamilton, in 1982. As per the Council of Supply Chain Management Professionals, ² SCM is defined as follows:

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.

More comprehensively, SCM is defined by Mohanty R. P. and Deshmuk S. G.³ as follows:

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products and distribution of these finished products to customers. Supply chain management is the integration of these activities through improved supply chain relationships to achieve a competitive advantage.

In essence, SCM can be understood by what it can achieve, such as:

• It manages three flows

  − Inventory, information and cash

• It manages four cycles

  −Procurement, manufacturing, replenishment and order fulfilment

• It aligns capabilities of

  −Suppliers and service providers

EXTENDED SUPPLY CHAIN

There are basically two types of supply chains: generic and customized. The generic supply chain links supplier, manufacturing and distribution divisions in a sequential flow. The customized supply chain, on the other hand, eliminates some of the processes that are covered in the traditional supply chain. Take, for example, the SCM of “Dell” (Figure 1.1), wherein the manufacturing process is eliminated and substituted by assembly centres and the distribution is made directly to customers, eliminating any intermediaries. Dell SC design cuts cost by eliminating non-value-added processes in the supply chain.

 

 

The supply chain of a manufacturing firm has three main functions to integrate and manage: buy, make and distribute. However, if the supply chain is further extended to look into suppliers’ suppliers and downstream to customers’ customers, it is called an extended supply chain. Extended supply chains can become too complex to control, but if managed properly, they result in better control of costs, delivery and end-product quality, which in turn translates to higher customer satisfaction and profitability. Extended supply chain (Figures 1.2 and 1.3) is one wherein everyone contributes to a product. For example, if a company makes garments, then its extended supply chain would include factories where the cloth is made and printed, factories where the yarn is produced, factories of other raw material producers and so on. In the extended supply chain, it is critical for a company to keep track of what is happening in its chain because a supplier or a supplier's supplier could end up having an impact on you.

 

 

 

For example, a problem in a manufacturing unit that supplies ball-bearings to an automobile manufacturing company may cause the latter to run out of its inventory of ball bearings. If the unit knows about the shortfall in its extended supply chain in advance, it can find another supplier to keep its operations running.

SUPPLY CHAIN INTEGRATION

In today's competitive world, a company cannot survive on its own; it can only grow with the help of suppliers and their co-operation. Therefore, SCM should deal with the process of co-ordinating the flow of information on the one hand and the flow of goods on the other, across a network of suppliers, manufacturers and distributors.

There is a great deal of uncertainty about demand in the market. Consumer loyalty is at its lowest; even the products are offered in great variety and features with attractive prices. Therefore, information regarding changes in customer demand pattern should flow back to manufacturer. This feedback should be timely to reschedule the production programme.

With timely and accurate market feedback, a manufacturer can bring about a change in production and requirements of raw material at the production plant itself. Otherwise, inventory will pile up, which will be either slow moving or dead. Therefore, it would not be wrong to say that the success of SCM depends on the co-ordination with the service providers and marketing channels.

Customer requirement is determined at the retail level. This determines production need, which in turn, helps to chalk out the need for raw materials, parts and components. Thus, supply chain integration acts as a planning process and an information-based activity, which helps to determine market requirement and convert demand into supply and supply into goods through a well-defined planning process.

Supply chain integration calls upon decision-making nodes in the chain to join hands to solve problems and improve quality of work, reduce costs, reduce lead times and enhance information sharing. Thus, integration would help reduce the element of uncertainty and increase quality and market acceptance of the product. The new products could be co-designed with suppliers and customers to achieve economies of scale with standardization of parts.

For example, McDonald works in close co-operation with all its vendors, helping them set up their operations, arranging equipment for them, providing technical inputs and training them to meet its tough standards. This “to help, to get helped” strategy is at the base of supply chain integration.

Today, supply chain integration is practised in a broad range of industries with varying techniques to suit specific issues and business characteristics of suppliers, manufacturers, channel partners, customers and market–product configuration. The benefits of supply chain integration are available to all. However, the success of supply chain integration can be evaluated against the objectives of:

• Service: Actual against desired with quality, place and timing.
• Cost: Cost to customer in meeting his/her service and time requirements.
• Assets: Effectiveness of assets to meet variability of consumer demand and to simultaneously create operational efficiencies.
• Time: The shortest timeframe to convert customer order into cash realization.

SCM is fundamentally based on the idea of partnership with suppliers, marketing channel members and other service providers. Traditional models of business organization are based on the philosophy of maximizing the revenues and minimizing the costs. In many cases, these goals can be achieved by disadvantaging another entity in the chain. However, under the SCM model, the goal is to maximize profit through enhanced competitiveness, imparting benefits to all partners in the supply chain. These goals can be achieved only if the entire supply chain is closely integrated so that total channel inventory is minimized, bottlenecks are avoided, timeframes are compressed and quality problems are eliminated.

Today, in the mega-competitive age, individual companies compete, not as companies, but as one supply chain against another. Hence, successful companies will be those whose supply chains are more cost-effective than those of their competitors.

SUPPLY CHAIN LINKAGES

The key linkages in a supply chain are between procurement and manufacturing and between manufacturing and distribution. Figure 1.4 outlines the critical linkages that connect the marketplace to the supply chain. The three sub-systems—procurement, manufacturing and distribution—have a number of critical elements.

 

Procurement

Companies with supply chain initiatives have adopted the philosophy of co-makership. This is based on the idea of a mutually beneficial relationship between the supplier and the buyer. It is a partnership approach to identify opportunities for taking costs out of the supply chain instead of simply pushing them upstream or downstream. In co-makership, both the buyer and the seller are at a win–win situation. The information is shared to jointly solve the problem and improve upon the quality. Co-makership will normally involve long-term relationships based on single sourcing rather than multiple sourcing. Mahindra & Mahindra, in India, has adopted the co-makership philosophy, which has resulted in their supplier base falling to nearly one-fifth. Here, the approach is to consider the supplier as your younger brother and his supply chain as an extension of your supply chain. You help him financially and technically to reduce cost and enhance productivity. The profits gained or cost reduced will be equally shared. This is possible only with smaller supplier base which will enable the firm to have better control on performance and its measurement.

A fundamental feature of this integrated approach to SCM is the adoption of some form of materials requirement planning (MRP) linked to schedule coordination.

Procurement is none but MRP to manage the inbound flow of materials by linking the factory to its suppliers. In the recent past, there has been a number of developments in procurement practices, such as e-procurement, reverse auction, and vendor management inventory (VMI), which have enabled a more flexible demand-based approach in the procurement process.

MRP requires the linking of suppliers’ production schedules with those of their customers. The objective is to consider the suppliers’ operations as an extension of the customer's. Companies, through Internet-based communication systems, develop links with all of their suppliers, so as to have full visibility of the production schedules. By using electronic data interchange (EDI), corporations can now reduce lead times, eliminate multiple data entries and take costs out of the supply chain.

Manufacturing

Keeping in mind the volatile market demands, there is a need for flexibility in manufacturing capability and capacity in terms of the ability to produce variety and volumes without affecting the cost. In the past, manufacturing philosophy was dominated by ‘economies of scale’. This led to the setting up of large capacity plants that were capable of producing large quantities of a standard product at very low unit production costs. Many MNCs adopted this strategy in producing a limited range of products for global market consumption.

On the other hand, companies went to the extent of building up large inventories of finished products ahead of demand to cover up the inability to respond rapidly to changing customer requirements. This resulted in offering limited product varieties to the customer. In such situations, they looked out for strategies to reduce total supply chain costs (not just manufacturing costs) that would offer maximum flexibility against customer requirements.

The necessity forced the companies to trace the route to flexibility in manufacturing, which does not necessarily lie in using new technology, for example, robotics. The Japanese have shown that flexibility can be achieved through focusing upon the time a company takes to plan, schedule, set up, change over and document its manufacturing process. These activities are the classic barriers to flexibility. If these barriers are removed, then manufacturing can respond far more rapidly to market requirements. Ideally, with zero lead times, total flexibility can be achieved with no forecasts and inventory. However, zero lead times are impossible to achieve. The Japanese, however, have shown that impressive reductions in lead times can be achieved by questioning everything we do and the way in which we do it.

Distribution

The role of distribution in SCM is beyond transport and warehousing. The success in distribution today depends on managing the demand.

In the demand management process, the company anticipates and fulfils the orders against defined customer service goals. Information flow is the key to success in this process. The categories of information required are:

• Information from the marketplace in the form of medium-term forecasts.
• Information from customers preferably based upon actual usage and consumption.
• Information on production schedules and inventory status, and
• Information on marketing activities such as promotions that may cause demand to fluctuate.

In reality, forecasting accuracy will rarely be achieved. Instead, the objective should be to reduce the dependence upon the forecast by improved information on demand and by creating systems capable of rapid response to such demand. This is the principle behind the quick response supply chain, which in turn, reduces cost and enhances customer service. In this case, items that are consumed or purchased are transmitted to the supplier triggering an immediate response. Today, customers prefer faster and frequent deliveries in smaller quantities. The higher transportation cost will be offset by the cost of reduced inventory in the pipeline. Information technology has been a major enabling factor in quick response supply chain, linking the point of sale or consumption with the point of supply.

A further trend that is visible in distribution is postponement. Postponement refers to the process where the final configuration or form of the product is delayed until the last possible moment resulting in flexibility and reduction in finished goods inventory. For example, at Asian Paints, using ‘paint-dispensing machines’ at retail outlets, the company postponed the making of the final ‘paint shade’ (as required by the customer) to the dealer's place. This method reduced the inventory of finished goods at the factory level.

In essence, distribution in the integrated supply chain is an information-based, value-added activity, providing a critical link between the marketplace and the factory.

DECISIONS IN SUPPLY CHAIN

The decisions in SCM are taken at three levels: strategic, operational and tactical. Strategic decisions have a longer time horizon. These are always in line with corporate strategy, which guide supply chain policies. Strategic decisions influence supply chain network designs. Operational decisions are short-term and focus on activities on a day-to-day basis. Tactical decisions are for enhancing the efficiency and effectiveness of the supply chain system. The major decision areas with strategic, tactical and operational elements in SCM are:

• Network
• Vendors
• Production
• Inventory
• Distribution
• Information

Network Related

This relates to the choice of location of supply points near demand points, including production facilities, stocking points and sourcing points in creating a supply chain. The facilities location decision involves commitment of resources to a long-term planning horizon. The location of production facilities in the network decides the path of goods movement. The network decision is of great significance to a firm for reaching the market. It impacts revenue, cost and level of service. In general, network-related decisions are based on manufacturing costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, and production limitations. The location decisions are strategic in nature; however, they have implications on operational-level activities.

Vendor Related

The suppliers of raw materials, parts and components play an important role in the supply chain due to the fact that the planning of production schedules depends on the supplier's dispatch schedules. For a production schedule to run on time, firms should have reliable suppliers, conforming to delivery schedules and lead times. Reducing suppliers’ base normally enhances the buyer's control on the procurement process. It also enhances reliability and loyalty of suppliers.

Therefore, the buyer should go in for a single source (Figure 1.5) of supply rather than depend on multiple vendors. Smaller vendor bases help in developing long-term relationship based upon trust, mutual dependence and sincerity.

 

 

Reduction in the number of suppliers would enhance coordination of flow of information and raw material and improve reliability of delivery in terms of time, resulting in reduction in procurement costs. TELCO, while developing the Nano car, squeezed its supplier base to keep the cost low, the quality high and to ensure delivery at short notice. Sona Steering, Telco's single supplier of steering, developed and supplied steering assembly in the shortest possible time. This indicates the benefits derived from maintaining a single source of supply.

For reducing supplier base, firms can employ distributors who will collect raw material or components from various suppliers and dispatch them to the manufacturer. With this, the procurement process will be under tight control as the manufacturer would have to contact only a single source for supply.

For example, at McDonalds, mutton comes from Hyderabad-based Al-kabeer, lettuce is flown in from Pune and Ooty, buns are from Cremica Industries, Ludhiana, and cheese comes from Dynamix Industries, Baramati (Maharashtra). The hubs of the cold chain are located in the North and the West and are managed by Radhakrishna Foodland that dispatches the supplies to the restaurants, processes information and coordinates the work.

The hub concept is fast gaining acceptance as a distribution hub cuts inventory costs due to economies of scales, control on inventory handling and upkeep, and helps in enhancing competitiveness of the distribution process. Hindustan Unilever Ltd dispatches trainload of goods periodically from Mumbai to their distribution hub located at Nagpur to take care of secondary distribution in central India. Similarly, Ford chose Nagpur as its distribution hub in India mainly because of its convenient location.

Production Related

Production-related decisions are about product mix, location of plant and suppliers base to that plant. In other words, these decisions are about allocation of plants to distribution centres (DCs) and allocation of DCs to markets. Production-related decisions impact revenues, costs and customer service levels of the firm. The other key consideration in decision-making is the capacity of the manufacturing facilities to serve the assigned market. Operation-related decisions include production planning, manufacturing and equipment maintenance. Other factors that affect these decisions are workload balancing and quality control measures at a production facility.

In today's competitive markets, manufacturers are required to offer a variety of products. This requires manufacturers to establish flexible manufacturing systems to enable them to provide a broad range of products and also to develop and introduce new products. Hence, manufacturers should develop flexible manufacturing systems to respond to orders from customer in terms of volumes and varieties without any significant difference in cost. For example, SKF Ltd manufactures 20,000 varieties of bearings for different applications. In high-precision products like bearings, manufacturing demands continuous adjustment in process standardization. This helps in designing various types of products to cater to the changing requirements of customers.

Offering a variety of products will be of little value if the market demands quick response. Therefore, an organization needs to change its strategy, depending upon what form of flexibility the company needs from its plants.

For customized products, manufacturers would need to develop the ability to carry out a large range of jobs in the plant. However, to develop quick response as its primary competitive weapon, firms would need to focus on building flexible manufacturing processes. For manufacturing flexibility, measurement methods as well as personnel employed should be aligned to provide form to flexibility in the entire system including its sub-systems.

Inventory Related

Inventories in the supply chain include raw materials and semi-finished or finished goods. These can also be processed between multiple locations. The purpose of inventory is to reduce the level of uncertainty in the supply chain. Inventory holding can cost anywhere between 20 and 25 per cent of the material value. To cut this holding cost, efficient management is important in supply chain operations. Inventory management is an important activity in the supply chain as excess inventory eats into profits. The inventory policy decisions have long-term implications. Hence, inventory decisions are strategic in nature. Normally, the top management sets goals for level of holding the inventory. These include inventory control policies such as deciding optimal levels of order quantities and reorder points, and safety stock levels at each stocking location. These decisions are critical in nature as they are determinants of customer service levels and customer satisfaction levels thereof.

Distribution Related

Selection of mode of the transportation and the route are critical decisions in controlling the cost and speed to the market. For example, for low unit price products, the logistics cost, as a percentage of product price, is high. Here, the selection of transportation mix for reaching the markets, that too in bulk quantity, is important to reduce the incidence of logistics cost on product price. These decisions are closely linked to the inventory decisions. The best choice of transportation mode is decided by trading off the cost of using the transportation mode with the cost of inventory being moved by that mode. For example, air will be preferred as a transportation mode because it is faster, reliable and warrants lesser safety stocks—but it is too expensive. Sea or rail transportation may be much cheaper, but they require holding inventory in bulk quantity. In cases wherein transportation is more than 30 per cent of the total logistics costs, operating efficiently makes perfect economic sense. Hence, shipment size, vehicle routes and dispatch scheduling are important areas that need to be covered in a firm's transport strategy.

Information Flow Related

Today, it is not one enterprise competing against another; rather it is one supply chain competing against another. Hence, for the supply chain to be efficient and cost effective, it is necessary to have better integration among the entities in the supply chain. In competitive markets, responsiveness to changes with speed and accuracy is vital for success. As entire supply chain activities are information based, a company's continued success depends upon its ability to build information architectures that are responsive to dynamic markets. Therefore, effective online integration of a company with its buyers and suppliers is a must. Use of Internet technologies facilitates meaningful communication between a firm's internal and external partners. Enterprise resource planning can also be adopted as an integrated planning and control tool to connect customers, suppliers and enterprise activities in line with the value chain of the firm.

Today, the complexities involved in sustaining, surviving and succeeding in a volatile environment have increased substantially. Organizations will be able to cope with the turbulent environment and with the complexities of operations only if they develop an efficient supply chain system that is integrated, have reduced suppliers’ base, are flexible in manufacturing and make optimum use of information technology.

PREVAILING PRACTICES

Over the years, SCM has emerged as one of the most powerful business improvement processes. Smart companies have created networks for raw material suppliers, product manufacturing units, storage points, DCs of the products, and finally, they have started delivering the products and services to customers.

The objective of supply chain networking is to encourage product and service innovation with an objective to satisfy the customers. These organizations see value enhancement through integration of systems and supply chain operations across all business functions. Today, organizations are moving towards a total system of supply and delivery linking directly to the market demands.

Business organizations with supply chain integration have succeeded in increasing their revenue and profits. They have been able to cut supply cost through improvement of their purchasing function as per the market demand. Today, companies apply information technology to their supply chain to gain advantage of the firm's operational improvements. As customer demands are ever changing and markets are becoming more and more volatile, business firms have formidable challenges ahead in managing their supply chains.

PRTM⁴ Management Consultants Inc., USA, conducted a study on 350 manufacturing and service companies across the globe and published its report on 22 June 2010. The study reveals the following key supply chain challenges that companies will be up against:

• Increased supply chain volatility and uncertainty
• Creating global customer and supplier networks
• Creating cost-optimized supply chain configurations
• Risk management in the end-to-end supply chains
• Integrating and empowering existing supply chains

The main challenge for many companies is not to redefine their organization models, but to transition and manage the organizational change. To make a truly empowered supply chain organization work, companies must first determine what their target models should look like and persuade the senior management to make the required changes. To make an integrated supply chain work, it is essential to train and acquire top talent with end-to-end supply chain knowledge.

Successful firms with supply chain initiatives have developed cross-functional trust and also cross-organizational trust with distributors and suppliers. They have succeeded in improving co-operation amongst internal functions and have gained significant operational benefits. Many companies benefited through flexible manufacturing systems resulting in reduced inventory and operation costs. Using demand management tools in their supply chains, companies can manage the process of acquiring the right raw materials more efficiently, utilizing the necessary machines and human resources available within the appropriate timeframe, thereby scheduling output to meet demand without excess inventories.

Firms with supply chain initiatives are now focusing on linking the demand chain with the supply chain in a holistic manner to achieve cost reductions throughout the chain. This has resulted in substantial savings by way of efficient handling, storage and delivery of products in the supply chain.

Automobile manufacturers integrate their suppliers to have just-in-time (JIT) deliveries at the assembly plant to make the supply chain lean. The assembly plant receives only the components needed for the specific production schedule resulting in very low, or no buffer inventories. It then passes on the information on production schedule to suppliers only hours/days before assembly. The suppliers finalize their production according to the models to be produced by the automobile manufacturers. Thus, the flow of product between suppliers and manufacturers is integrated to eliminate costs while maintaining service to production. Supply chain integration is practised in both consumer good and retailer industries. These industries practise supply chain integration to better their response to consumer demand, with low investments in finished goods inventory. FMCG companies have designed programmes of continuous replenishment to retailers’ DCs to provide high store service at lower cost. The replenishment is based on daily sales information as well as store order and DC inventory levels provided by the retailer. Here, the manufacturer takes responsibility for supply chain integration.

The concept of SCM is universally accepted and practised. However, the cutting edge lies in speed to market, cost controls and customer satisfaction. A focus on the objectives of service, cost, assets and time, when coupled with creative thinking, brings forth new approaches to business practices. In conclusion, well-managed supply chains create profitable growth for all members of the chain.

REVIEW QUESTIONS

1. Explain the concept of supply, supply chain and supply chain management.
2. Discuss the critical linkages in a supply chain.
3. Explain the concept of “extended supply chain” and the issues therein.
4. Which are the critical decision-making areas in the supply chain?
5. “Supply chain management is a road map to success for a business”. Explain.

INTERNET EXERCISES

1. Council of Supply Chain Management Professionals is world's leading source for supply chain profession. Visit http://cscmp.org/aboutcscmp/definition.asp and study various basic definitions on supply chain topics and also look into the supply chain trend studies published by the CSCMP.
2. The Infosys global supply chain management blog enables leaner supply chains through process and IT-related interventions. Visit http://www.infosysblogs.com/supply-chain/ and study the latest trends and solutions across the supply chain management landscape.
3. For further reading on introduction to supply chain management visit http://logistics.about. com/od/supplychainintroduction/a/into_scm.html

VIDEO LINKS

1. What is Supply Chain Management?http://www.youtube.com/watch?v=Mi1QBxVjZAw&feature=related
2. Supply Chain -3 Key Things to Know, http://www.youtube.com/watch?v=OaxJ4oEuBO8&feature=related
3. Preview for Supply Chain Management by CSCM (Council on Supply Chain Management), http://vimeo.com/1905919

PROJECT ASSIGNMENTS

1. “E-Chaupal” is an innovative business model implemented by ITC, India. Prepare a flowchart for this supply chain. Compare and contrast the working of the traditional and the E-Chaupal supply chain model bringing out the cost and productivity aspects (www.itcportal.com).
2. “Starbucks” is a leading chain of coffee shops across the world. They have their own coffee farms and procure coffee beans from the markets. The distribution is through their coffee shops and other organized grocery chains. Prepare a report on their extended supply chain covering the supply chain strategies that they have successfully implemented.